Back to the Future: Choosing Disruptive Technology that Lasts
Disruptive technologies are currently dominating industries with new, innovative features. But how can managers ascertain how and when to jump on an emerging technology for competitor advantage — or even when to bail from a disruptive technology that may be exposing their organization to more vulnerabilities than opportunities? And should managers purchase from unknown firms or trusted, older firms that may or may not be leaders in next-generation technology? Understanding how to make quality adoption decisions based on satisfaction and an intention to continue using the technology is of critical importance.
Given the risk/reward tradeoff inherent in disruptive technology adoption, this Advisor aims to identify the motives, pressures, and efforts that influence continued adoption intention and usage of a disruptive technology after the initial adoption stage. Since disruptive technologies are difficult to predict and properly understand, organizations should employ a more extensive searching effort in order to make a high-quality decision that leads to continued adoption. Most firms that introduce disruptive technologies tend to be new entrants, not incumbents that have developed long-term trust with customers. As such, the ideal supplier of a disruptive technology may be one that the buyer does not have an existing relationship with and whose products are unknown to the buyer.
Legitimacy pressures are driven by interorganizational trust (i.e., trust between a buying manager and a supplier of a disruptive technology). Essentially, firms that mimic others and/or give in to perceived norms driven by interorganizational trust will be less likely to search for the “right” technology for use well into the future. As such, it is my recommendation that firms adhere to efficiency motives and increase their searching efforts to lead them toward a high-quality adoption decision. Searching efforts should be viewed positively in this scenario while interorganizational trust should be viewed negatively, thus contradicting previous literature that frames interorganizational trust as positive and searching efforts as negative.
From a survey of 211 buyers of emerging cloud computing technology, I developed a model that explores both the positive and negative influences on satisfaction and the subsequent continued adoption intentions for a disruptive technology (for more on my survey and model, see my recent Executive Update, “Disruptive Technology: What Drives Post-Adoption Usage”). This model for post-adoption of disruptive technology considers the factors of efficiency/legitimacy motives, including mimetic competitor pressures and normative supplier pressures; interorganizational trust; searching efforts; and, ultimately, satisfaction. Disruptive technologies are inherently more difficult to understand and properly adopt than more incremental technologies, thus necessitating different motives and a more extensive searching effort to achieve satisfaction.
First Things First: Incumbent or New Entrant?
Disruptive technologies generally underperform upon their initial release as they tend to fall short of a dominant technology most valued by mainstream customers. However, disruptive technologies exceed the capabilities of dominant technologies on a few dimensions appealing to fringe customers. These disruptive technologies also tend to be lower priced upon their initial release and are thus appealing to more price-sensitive customers. Over time, the disruptive technology improves, becomes more appealing to additional customers, and eventually displaces the dominant technology. Consequently, the fringe customers who adopted the disruptive technology displace the mainstream customers who stayed with the previous technology.
However, adopting managers not only take a chance on an unproven product but must also likely abandon their previous technologies, processes, and associated strategies as disruptive technologies cannot be complementary, like incremental or even radical technologies. Moreover, adoption of new technologies, strategies, and methodologies are often met with reluctance by employees. To alleviate this uncertainty, firms may turn to trusted incumbent suppliers over smaller, new entrants to reduce perceived risk, thereby increasing the likelihood of adoption. In cases where the incumbent and new entrant offer similar, potentially disruptive technologies, trust can have an especially biasing impact on the buyer’s decision. However, while risk reduction is often desirable, blindly relying on an incumbent may not be an appropriate strategy. Certainly, previous buyer-supplier relationships may increase adoption rates of new products, but the quality and fit of the technology will ultimately determine its post-adoption usage frequency. Therefore, following the trusted incumbent may not be the optimal decision in the case of disruptive technology adoption.
What’s the Motive?
Products adopted for the wrong reasons run the risk of being underused by the adopting firm. From the buyer’s perspective, it is critically important to focus on the drivers of continued adoption. Technology adopters tend to fall within two motivation camps: efficiency and legitimacy. A firm with efficiency motives usually adopts a technology that best fits with its economic efficiency rationales (e.g., reduce operational costs, improve productivity), while a firm with legitimacy motives often chooses a technology that has been adopted by other organizations, thus legitimizing a decision and minimizing search efforts. Finding the most economically efficient product that maximizes utility and minimizes costs may require significant searching time and effort. Buyers are more likely to find the ideal product when all options are considered, giving credence to long searches in which an abundance of information is exchanged. Conversely, while two specific legitimacy motives — mimetic pressures from competitors and normative pressures from suppliers/other industry sources — may lead consumers to adopt a new technology, they do not necessarily lead to continued adoption and usage. Considering the investment necessary for adopting a disruptive technology, a poor adoption decision, in which the likelihood of discontinuance increases after the initial adoption stage, could have detrimental implications.
Mimetic competitor pressures occur when multiple organizations within a competitive environment take the same action, such as adopting a new software system, thereby increasing the pressure on a given organization to mimic these actions. Indeed, mimetic competitor pressures have been found to cause a bandwagon effect in industries where nonadopting firms may eventually adopt a new product out of fear of being left behind by competitors. Normative pressures are those felt by a given organization to meet the values and norms of the other members of their given social network, such as suppliers and trade association members. These types of pressures have been found to reduce the inherent risk associated with adopting a new product and, subsequently, encourage the buying firm to adopt a new product. However, as one study reveals, consumers who succumb to mimetic competitor pressures and normative supplier pressures when making an adoption decision are much more likely to discontinue use of that technology, thereby wasting their initial investment.
Then Comes Trust
By relying on trust, the buying firm hopes to mitigate some risk and uncertainty. But too much trust with a service provider may increase levels of opportunism and lead to decreased performance for the buyer. Indeed, extraordinarily high levels of trust between organizations will actually lead to reduced motivation to negotiate, thus resulting in lower quality solutions and causing firm performance to suffer, especially for the buyer. Thus, when it comes to disruptive technology, managers should prefer moderately close supplier relationships over extremely close partnerships, as partner opportunism in highly uncertain scenarios is at its peak in very close relationships.
[For more from the author on this topic, see “Disruptive Technology: What Drives Post-Adoption Usage?”]